Understanding Redundancies - A Guide for Australian Employers - Employsure
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Understanding Redundancies. A Guide for Australian Employers.
Contents
Part 1 Part 2
What is a Redundancy? Negotiating reduced pay or hours
Page 1 Page 5
Part 3 Part 4
Leave without pay/unpaid leave Job sharing
Page 6 Page 8
Part 5 Part 6
Stand downs Redundancy: The last resort?
Page 9 Page 10
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Understanding Redundancies | E-Guide
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Part 1
What is a Redundancy?
In recent times, Australia’s business landscape has changed.
The COVID-19 crisis has forced employers to review every
aspect of their business, from safety to staffing.
As we adapt to this new operating find the situation extremely difficult to
environment, many small businesses manage as there are not only a variety
will review their staffing levels against of different employment relations
their revenue, cash flow and operating considerations regarding redundancy, but
requirements. For many employers, also an extremely personal concerns that
have the potential to significantly impact a
the term redundancy may be a part
business. In some cases, redundancy can
of this review.
be very expensive. In other cases, not so
While redundancy may be a legitimate much. And, if you don’t follow appropriate
option for employers, it is a complicated processes, an employer can potentially be
process. There are many employers who exposed to a variety of claims.
Understanding Redundancies | E-Guide 1
A redundancy occurs when an employee’s are covered by and their length of service,
job is no longer required to be performed an employer may be required to consult
by anyone. and communicate with its staff.
Scenarios where a redundancy may Redundancy doesn’t have to be your
occur include: first or only option. There are alternatives,
The business is restructuring such as consulting with employees to
reduce their pay or hours, take paid or
ew technology fulfills the job
N
unpaid leave, redeployment or job
obligations
sharing, and stand downs.
he business is relocating or
T
This guide will help employers better
closing down
understand redundancy and the other
When dealing with a redundancy, options that could be available if you need
depending on what Award the employees to change staffing and resourcing levels.
Understanding Redundancies | E-Guide 2
What is the
Redundancy process?
Is it a genuine redundancy?
YES* NO
As there is a potential of Unfair Dismissal Claim Reconsider proceeding with redundancy
Warn all affected employees
Consultation
Selection criteria**
Alternative employment
Confirmation of redundancy
*Exempt from Redundancy payments
Employers in a business which has fewer than 15 employees are generally exempt from the requirement to pay redundancy. Note: there are also
several other general exemptions from receiving redundancy pay. We recommend seeking professional advice for further details as the applicable
industrial instrument may affect these exemptions.
**Do Casuals Get Paid Redundancy?
In general, casuals do not have access to redundancy payment. However, regular and systematic casuals may have access to paid redundancy.
We recommend seeking professional advice for further information
Understanding Redundancies | E-Guide 3
JobKeeper and Stand Downs Ensure you have your documentation The JobKeeper scheme has been in order e.g., your staff contracts, and of immense assistance to Australian relevant policies businesses during COVID-19. With the Ensure the working status of each staff scheme ending on 28 March 2021, this member is clear means any employees under a JobKeeper enabling stand down direction must have Ensure you have the most up to date their normal employment conditions signed contracts saved and stored in reinstated. BrightHR for easy access Naturally, you may be considering Do a review of your rosters and cost-saving measures due to the end employees to check what losing staff of JobKeeper – and redundancies may be will do to your coverage, e.g., do you an option for you. have casuals who you can remove Your business may also be able to continue shifts for to reduce overheads before to keep your employees stood down. Part considering more costly and timely 5 covers stand downs in more detail. steps like redundancy? Prepare with BrightHR Check the accrued annual leave Before you provide notice to your and approved use of annual leave employees, make sure your documents of your staff with BrightHR’s staff are in order. holiday planner Understanding Redundancies | E-Guide 4
Part 2
Negotiating reduced
pay or hours
In this section, and with all other parts of the guide, we will speak in general
terms. Make sure to check any applicable Modern Award, enterprise
bargaining agreement or individual contracts.
Reducing employee’s pay is an option It is quite difficult to compliantly reduce
that may be available to you. Reducing an an employee’s wages or salary. However,
employee’s pay may not only save you the there is another, arguably simpler, method
cost of a redundancy but it may also be a to help save wage costs. This brings us
simpler way to reduce your wage bill and
on to the next option when considering
improve your business’ financial health.
redundancies – negotiating reduced hours.
There are two basics of workplace
relations legislation to remind yourself Negotiating Reduced Hours
of here: you will need mutual agreement
Asking an employer to reduce hours is
to change your employee’s terms and
conditions, and you can’t pay under the another option which may avoid having
applicable minimum pay. to make a redundancy.
Generally, employers cannot unilaterally As with reducing pay, employers should
reduce an employee’s pay. If you reduce an check their obligations before reducing
employee’s pay without their agreement, hours. In some cases, reducing hours may
then you may you be breaching the require formal consultation. You might
contract of employment as well as
also want to check your award to ensure
applicable workplace relations legislation.
that reduction is not prevented by way
Secondly, if you do proceed with of award provisions such as minimum
negotiating with an employee’s pay –
engagement periods.
even if there is mutual agreement – you
must ensure you do not pay below the Consultation requirements might also
applicable minimum pay and conditions. extend to casual employees.
Understanding Redundancies | E-Guide 5Part 3
Leave without
pay/unpaid leave
Another option available to employers is to request their staff
to take leave without pay.
You may be able to negotiate with your Casual employees are not entitled to
full-time and part-time employees for paid leave. Employers can effect a similar
them to take one day off unpaid, per outcome with their casual employees
fortnight, for example. by assigning them less hours. However,
prior to doing this you should seek advice
Keep in mind that on any days, or during particularly if they have been engaged
an extended period, that an employee on a regular and systematic basis for an
takes leave without pay, their employment extended period of time.
entitlements (like annual or sick leave) do
Again, before exploring this option make
not accrue. However, as their employment sure you check your applicable Modern
remains continuous during any leave taken Award, enterprise bargaining agreement
without pay, their length of service or individual contracts to understand
is unaffected. your obligations.
Understanding Redundancies | E-Guide 6Redeployment Other considerations may be relevant
such as the location of the job and the
Many Awards require employers to explore
level of remuneration.
possible redeployment during formal
consultation. However, it can also be a way of avoiding
having to go through a redundancy.
Redeployment means considering the
Instead of going through with a
possibility of moving a staff member to
redundancy in one side of the business,
another workplace or moving an employee
and hiring for a new position in another,
from one role to another role. Doing so
there may be an opportunity to shuffle
means the employee may be able to fulfil a
staff around.
needed role and retain their employment.
When considering redeployment, the
job must be suitable, in the sense that
the employee should have the skills and
competence required to perform it to the
required standard either immediately or
within a reasonable period of retraining.
Understanding Redundancies | E-Guide 7Part 4
Job sharing
Instead of making an employee or a role redundant, job sharing
is something to consider.
Job sharing could help you retain This flexible working arrangement
an employee and save on the costs may also suit some of your employees.
associated of future hiring. Employees with caring or other personal
Job sharing is, as the name suggests, responsibilities may find job sharing
when a role is shared between multiple their role gives them an opportunity to
employees. It can be option when two balance those responsibilities with their
part-time employees can combine to employment.
fulfil a full-time role. This process would require you to
A common example of a job-sharing negotiate with your employee through
arrangement may be found in receptionist formal consultation as moving them
roles, who often have more than one into a shared arrangement may require
person filling that role over a week. reallocation or redefinition of their role.
Understanding Redundancies | E-Guide 8Part 5
Stand downs
Stand downs are another tool that employers have at their disposal
to manage their workforce.
Stand downs are best used when an described above, you still may not be able
employee cannot usefully be employed to stand down your staff without pay.
during a period because of a stoppage of Prior to considering a stand down, you
work for any cause for which the employer should seek professional advice.
cannot reasonably be held responsible.
In these extreme circumstances, you may
be to stand down your staff without pay.
While unpaid stand downs may seem like a
Considering stand downs?
saving grace, there are a lot of conditions
Employsure can help you better
you must comply with to be able to stand
understand this tool. give us a call
down your staff without pay. today on 1300 207 182.
Even if you meet the two conditions
Understanding Redundancies | E-Guide 9Part 6
Redundancy:
The last resort?
Redundancy requires an employer to satisfy a number of obligations and
may still incur a heavy financial cost to your business.
In order to properly carry out a The minimum notice period in the
redundancy, here are some of the steps National Employment Standards (NES) is
you must take as an employer. based on how many years your employee
has worked for you (continuous service).
Ensure it is a genuine redundancy
The applicable Modern Award or enterprise
A genuine redundancy means the bargaining agreement may stipulate a
employee is being dismissed as you don’t longer notice period than the below. If so,
require their role to be filled anymore. then that notice period which needs to
Also, a genuine redundancy may also be applied.
be compromised if you rehire after the Minimum notice periods for redundancy
employee has been dismissed. according to the NES
Go through a consultation process
with your affected employees Period of Minimum notice
employment period (weeks)
This is a requirement of all Modern
Awards and many enterprise bargaining Less than one year 1
agreements. What is required will depend
on the wording of the relevant clause.
One – three years 2
Provide adequate notice of
redundancy Three – five years 3
When ending an employment because of
redundancy, you need to provide adequate Over five years 4
notice or make payment in lieu.
Understanding Redundancies | E-Guide 10Make the redundancy payment Keep in mind that the table on this
page and the page above are minimum
The NES also provides for a minimum
requirements. Modern Awards and
payment to an employee made redundant.
enterprise bargaining agreements
Minimum payment for redundancy may have provisions that exceed the
according to the NES minimums tabled above.
The following are generally exempt from
receiving redundancy pay. Businesses
Period of continuous will need to exercise caution as there are
Weeks of pay
service
a number of aspects which may impact
on the below such as awards, service and
At least one year but
4 associated entities.
under two years
The general exemptions are:
At least two years but
6 mployees with less than 12 months
E
under three years
continuous service with an employer
At least three years but
mployees engaged under fixed term
E
7 contracts that have come to cessation
under four years
Casual employees
At least four years but
under five years
8 Apprentices
rainees that are engaged only for the
T
At least five years but length of the training agreement
10
under six years
mployees engaged by a small
E
business
At least six years but
11
under seven years
At least seven years but
13
under eight years
At least eight years but
14
under nine years
PLEASE NOTE
At least nine years but
16
Some awards may have specific
under 10 years provisions which indicate that
redundancy pay may still be applicable
At least 10 years 12
despite the general exemptions.
Understanding Redundancies | E-Guide 11Employsure is one of the
largest provider of employment
relations and workplace health
and safety services. Employsure has given me the
freedom to run my business in a
way that I need to. It’s given me
Why Employsure? the time and it’s actually taken
away a lot of worry that
At Employsure, we believe all Australian
I previously had.
employers, no matter the size, deserve access
Kieran Syme | DentFree AutoTree
to comprehensive, quality, honest advice and
support that is scalable to the needs of
their business.
Since the introduction of the Fair Work Act in
2009, workplace obligations have become more
complex and difficult to manage, especially for
overstretched small business owners.
Employsure was established in response
to these challenges. It is our aim to ensure
Australian business owners have access to Google can only help you so
cost-effective, professional advice on a variety far. Sooner or later you need to
of employment relations and work health actually talk to somebody who is
and safety matters. an expert in the field and that’s
where I found Employsure.
What we offer Ursula Zajaczkowski | The Source Bulk Foods
Employsure provides customised
documentation, unlimited advice, policy and
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business owners.
Being an Employsure client means no surprises –
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Our day and night advice line is available 365
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